Wednesday, 13 February 2013

Barclays and the sack race

Yesterday, Barclays announced it had made profits of £246 million in 2012, or just over £700,000 per day (or £8.14 every second of every hour of every day of every week of the year).

This was however down on 2011's looting when the bank made profits of £5.9 billion.However, when adjusted to remove fines over Libor rigging, PPI mis-selling and other scandals that have ravaged the bank, then its 2012 profits (on an adjusted basis) were £7.05 billion (or £224 per second).

The bank also announced a bonus pool of £1.85 billion (down 11% from 2011). The fall in profits and in bonuses though still large, excessive and exploitative are not enough.

So despite announcing these untold riches to be shared between shareholders and directors and other high fliers, the bank also announced that 3,700 staff will be made redundant - split roughly evenly between the retail business and the investment bank.

When I met with Jean-Luc Melenchon, the French Left Party leader, at the end of last year, he told me that one of his one his policy proposals was that no company should be able to make redundancies as long as it was profitable. After all, why should a company making profits be allowed to sack the workforce that produced those profits - simply to try to make higher profits for shareholders?

In the case of Barclays, their 2012 bonus pool of £1.85bn  would be enough to give each sacked worker £500,000 - more than enough to cover their wages. Barclays unadjusted profit of £246m would pay for 3,700 staff on average salaries of £66,000.

Now you might argue that such rules would be inflexible, especially in the case of a company that is trying to restructure - in the case of Barclays to restructure away from investment banking, and closing its tax avoidance unit, under considerable public scrutiny.

However, while voluntary redundancies could still be requested, what Melenchon's proposals would mean is that even when restructuring a company should offer alternative posts with re-training if necessary.

In fact Melenchon's proposals could be part of a modern full employment strategy, and would be a good way of preventing rising unemployment - something the OBR predicts we will see this year.

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